The Power of Creating Watchlists
Being organized is one thing that will make you a successful trader. When you are more organized, chances are you’ll discover opportunities execute them as soon as possible. Research has shown that people who are more organized achieve better results than those who are .
As a stock trader, you have access to thousands of stocks to trade. These are stocks listed in the United States, Europe, and Asia. The companies usually operate in different sectors such as pharmaceuticals, energy, financial, and technology. The companies can also be categorized in terms of their size. This means that there are small, medium, and large cap stocks. As you can clearly see, there are so many companies you need to know to come up with a great strategy.
In trading, you can either be a single stock trader or one who prefers diversification. A one-stock trader is one who trades a single stock at a time. The other one opens more trades at the same time. Diversification helps a trader avoid the risk of his trade going down and wiping his entire stake.
To be more organized, it is very important to have a watch list. A watch list is a set of companies, currencies, commodities, or indices that you are watching. These are the items that you are. Therefore, instead of looking at the entire market, you just focus on the assets that you are interested in. This helps you identify opportunities in a faster manner.
There are many free tools that help you create watch lists.The best tools I have used before are from Yahoo Finance Bloomberg . To create a watch list, all you need to do is create an account in these websites and then add companies or assets that you want to look at. After creating the watch list, it is advisable for you to download the accompanying mobile apps. Below is a sample Bloomberg Watch list.
The second advantage of having a good watch list is that it lets you follow the news that matter to your trading portfolio. Most watch lists provide an aggregated news about the companies in the watch list. For instance, if you have a Watch list with technology companies, you will receive the news from these companies. Therefore, in the morning when you want to plan your trading, all you have to do is to go to the watch list and see the latest news. Below is an example of a portfolio news page from Bloomberg.
An event at company A might have a spillover effect for company B if they are in the same industry. For instance, when a company like Proctor & Gamble (P&G) reports weak sales, hances of a competitor like Unilever to be affected are very high. In the same way, when a company like Apple reports excellent earnings, chances are that a competitor like Microsoft will also be affected.
A watchlist removes the clutter from your trading day. It helps you look and focus on companies that you are interested in. Also, Watch list from Bloomberg allows you to add your holdings. This enables you to see how your stocks are performing in real time when you are away from your trading terminal. You can also create a virtual portfolio with the respective holdings. You will use this portfolio to measure your performance against the market.
Whether you are a beginner or experienced trader, a good watch list is for you. As explained above, its use is enormous. It can help you identify opportunities when they arise. You can also use it to only follow the companies you are interested in. Remember that many companies allow you to create more than one watch list.